INTRODUCTION TO SIX SIGMA

A. OBJECTIVES
B. SIX SIGMA OVERVIEW
C. CUSTOMER FOCUS
D. VARIATION IS THE ENEMY
E. BUSINESS METRICS
F. INTEGRATION OF LEAN
THINKING & SIX SIGMA
G. BASIC SIX SIGMA CONCEPTS
AND TOOLS
H. ISO 9000/SIX SIGMA SYNERGY 1-0
 OBJECTIVES

• Background and fundamentals of Six Sigma.

• Identify customer needs in measurable outcomes.
• How our company’s value system is an indicator of it’s
performance improvement.
• Need to focus on process input, not process output.
• Variation is the main reason for process performance.
• How measurement of quality is related to process
improvement.
• Basic Six Sigma concepts and tools.
1-1
 SIX SIGMA OVERVIEW

• To thrive in today’s marketplace,

organizations must continually improve
their products and services to meet the
ever-changing needs and expectations
of the customer.
• This dynamic business environment
places a premium on innovation and
creativity, making it critical to
continually raise the bar on company
performance.

1-2
 SIX SIGMA OVERVIEW

6σ
• Our customers demand quality – and QUALITY is our
strongest defense against the competition and the straightest
path to sustained growth and performance.
• The evolution to a higher standard of improvement is made
possible by the concepts and practices of Six Sigma.

1-3
 WHAT IS SIX SIGMA?

To understand what Six Sigma is, let’s begin with a lesson in

elementary physics:

The 2nd Law of Thermodynamics states that Entropy, or

deterioration, is constantly increasing in all systems.

When applied to Mfg. and Services, this means that right after a
process is stabilized (or optimized), entropy immediately goes to
work to make it unstable – the process is subjected to a
ceaseless barrage of variation.

1-4
The TUNE UP Principle

1-5
 SIX SIGMA

• Six Sigma is a metric, a problem solving methodology

and set of tools.
• Six Sigma is a total business philosophy that Epic has
embraced.
• We must reflect on how the values/philosophies of Six
Sigma is different from beliefs, values and priorities
emphasized within Epic.
• Those things truly valued within Epic are the things that
drive everyone’s behavior.
• It is vital that every Epic employee understand the
values and philosophy of Six Sigma.
1-6
 BACKGROUND OF SIX SIGMA
• Developed by the Motorola Corporation in the 1980’s
in response to increasing competitive pressures from
Japan and chronic deficiencies in product quality.

• Resulted in a culture of quality that permeated the

organization and led to a period of unprecedented
growth and sales.

• Embraced by the likes of GE, Honeywell, Dupont,

IBM, Texas Instruments and Sony.

• Jack Welch, retired CEO of GE has described Six

Sigma as “the most important initiative GE has ever
undertaken.” GE points to Six Sigma as being a key
factor in its ability to sustain their legendary double-
1-7
digit growth rates.
 SIX SIGMA FUNDAMENTALS

• Data - driven process re-engineering methodology resulting

in paradigm shifts in the way a company behaves, treats it’s
customers and produces it’s products.
• Will result in major shifts in our way of thinking and our way
of doing business.
• Leads to quantum leaps in process and product quality.
• Fundamental objective is customer satisfaction through
Continuous Improvement in quality.
• Six Sigma is the GOAL.
• Products and Processes - 3.4 defects per 1 million
opportunities or 99.9997%.
• Sigma level is indicator of how often defects are likely to
occur. 1-8
 SIX SIGMA FUNDAMENTALS

• Sigma level is a metric; higher the sigma value, the

better.
• Accomplished by repeated application of strategy on a
project after project basis.
• Projects are selected based upon key business issues.
• Project cost savings drives dollars to bottom line;
typically 6 figures per project.
• Black/Green Belt typically complete 3-4 projects annually.
• Initiative designed to change culture through
breakthrough improvement to achieve aggressive stretch
goals.
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 CONCEPT OF 3 vs 6 SIGMA
We demand High Quality in our daily lives. . .
99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)

20,000 lost letters per hour Seven articles of mail lost per hour

Unsafe drinking water for almost 15 One unsafe minute every seven months
minutes each day

5,000 incorrect surgical operations 1.7 incorrect operations per week

per week

Two short or long landings at most One short or long landing every five years
major airports each day at each airport

200,000 wrong drug prescriptions 68 wrong prescriptions per year

each year

No electricity for seven hours each One hour without electricity every 34 years
month

99% “Goodness Level” is not close to being satisfactory.

1-10
 SIX SIGMA AS A VALUE

• Average company is in 3 - 4 sigma range.

• Shared traits include:
 Profitable and growing
 Market prices declining
 Increasing competition
 Internal failure (cost of quality) up 50% of sales dollars
 Unaware world class companies have similar processes
greater than 100x more defect free
 Believe zero defects are not realistic/achievable
 Have 10x number of suppliers required.
1-11
 Where does U.S. industry stand?
Restaurant Bills
Doctor Prescription Writing
IRS - Tax Advice
(phone-in) Payroll Processing
PPM (140,000 PPM) Order Write-up
1,000,000 Journal Vouchers
100,000 Wire Transfers
10,000 Airline Baggage Handling
Purchased Material
1,000 Lot Reject Rate
100
10 Average Best-in-Class
1 Company Domestic Airline Flight
Fatality Rate (0.43 PPM)

1 2 3 4 5 6 7

Sigma Scale of Measure

•Sigma level with various services is about 3.

•Our goal - to continually improve processes and become
world class. 1-12
 SIGMA AS A VALUE

• There are differences in philosophy, policies, procedures

and beliefs between companies with 3 to 4 sigma
capabilities.
• Biggest difference is MINDSET.
• 3 to 4 sigma companies are complacent, unaware and
unable to accept ideas that they must make “quantum”
leaps in process quality to gain/keep competitive edge.
• 6 sigma company is able to produce products in most
efficient means possible, competitively priced and of
highest quality.
• 6 sigma company will be at the top of their market and far
ahead of its competition. 1-13
 CUSTOMER FOCUS
• Business growth depends on how well we meet
customer expectations in terms of quality, price and
delivery.
• Ability to satisfy these needs is controlled by process
capability and amount of variation in our processes.
• Key six sigma activity - understanding (in quantitative
terms) customer needs and translating needs into
measurable outcomes.
• Need to focus on understanding/measuring process
inputs and looking at root causes of variation.
• We MUST place value and emphasis on taking
measurements.
• If we do not measure or do not know how to measure, 1-14
we will not achieve customer satisfaction.
 COMPARING VALUE SYSTEMS

P
Priority Description of what is valued

Describe and
Exploring Our Values rank what you
think is really
valued at
Your company

• On a piece of paper write down the things you perceive are the
most valued, emphasized and get the most management
attention - the things you think Epic stands for.
• Rank them in terms of what you perceive are the priorities of
the organization. 1-15
 COMPARING VALUE SYSTEMS

What We Really Value What Six Sigma Values

• Improving business
performance by improving
Quality and consistently
meeting Customer
Expectations
• Measurement
• Measuring inputs, not just
outputs
• Reducing defects, by
improving process and
product, to help achieve
business objectives

It is important that we compare and contrast the critical

six sigma values with what we, as a group, feel is
emphasized at Epic. 1-16
 BEHAVIOR IS A FUNCTION
OF VALUES

Behavior Values

• What we value is a key indicator of how successful

any company will be in improving it’s performance.
• What we value drives our day-to-day behavior since
behavior is a function of values.

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 The Focus of Six Sigma

Y= f (X)

Y X1. . . X N
 Dependent  Independent
 Output  Input-Process
 Effect  Cause
 Symptom  Problem
 Monitor  Control
If we are so good at X, why do we constantly test and inspect Y?
 Y = F(x) is key six sigma concept.
 We need to focus on process inputs (x’s).
 Six Sigma emphasizes measurement and understanding
of inputs (x’s).
 Our job is to discover the x’s that will really drive the Y 1-18
 VARIATION IS THE ENEMY

• Variation is the main reason for poor performance and key

focus of six sigma.
• Six Sigma methodologies focus on the drastic reduction of
process variation and defects.
• Result is ROBUST processes. 1-19
Primary Sources of Variation

Inadequate Design
Margin

Unstable Insufficient
Parts and Process
Material Capability

Region of Six Sigma Synergy

1-20
 HOW DO WE MEASURE VARIATION
AND QUALITY?

s
• Measure of variation
and quality
• Measure of capability
of our processes

• Unless we can measure something, we cannot improve

performance.
• Sigma is a unit of measure that gives us a way to measure
variation and the capability of our processes.
• The sigma value is used to designate the distribution or spread
about the mean.
• Sigma values indicate how often defects are likely to occur.
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 BUSINESS METRICS

• Unless we are prepared to invest in the measurement

of quality, we can not improve quality.
• If we do not measure quality and do not follow-up on
these measures, we send a message that we do not
value quality.

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 The Role of Questions

Same Same
questions measures

New New
questions measures

New measures requires that we ask new questions

• If we ask questions about inputs and not outputs, we

will receive focus and measures on outputs.
• Focus must be on process and product quality, root
causes and inputs versus outputs.
• New measures and new behavior require we ask new
questions.
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COST OF POOR QUALITY (COPQ)

• Represents visible and less visible costs of all

defects that exist in our processes
(manufacturing and transactional).
• Highest quality producer is lowest cost producer
as it relates to COPQ.
• Many feel that cost of reducing defects makes
reaching Six Sigma impractical.
• Net cost to reduce defects lowers as you
approach Six Sigma.
• As we drastically reduce defects we also
dramatically redirect resources tied up in looking
for and eliminating defects.
1-24
 TRADITIONAL COPQ IS ONLY THE
TIP OF THE ICEBERG
Tip of the Iceberg
Maintenance and service
Rejects Warranty
claims
Rework
Additional
Scrap labor hours
Opportunity cost if sales Cost to customer
greater than plant
capacity Expediting
Improvement program costs Excess inventory
Lost customer loyalty
Quality engineering
Process control and administration
Vendor control Quality audits
Inspection/test (materials, Longer cycle times
equipment, labor)

• Many costs related to COPQ are not readily visible; they are invisible
below the surface.
• Example - when process produces defective material, length of time
required to get completed components through the system increases.
• Longer cycle time = additional labor hours and cost of inspection to
monitor these processes.
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 FOUR COPQ CATEGORIES

• Prevention - those costs associates with personnel engaged in

designing, implementing and maintaining the quality system
(i. e.; Quality Management, Quality Engineering, Six Sigma
Black/Green Belt).
• Appraisal - costs related to measuring, evaluating and/or auditing
parts, assemblies, finished goods or processes to assure
conformance to Epic or external specifications (i.e.; Inspectors,
calibration, ISO 9000 expenses).
• Internal Failure - costs related to material and products that fail to
meet Epic specification and result in manufacturing losses. These
costs are incurred prior to shipment to the customer (i.e.; scrap,
rework).
• External Failure - costs incurred as a result of nonconforming
products shipped to customers (i.e.; labor charges). 1-26
 COPQ ECONOMICS (Old Belief)
But Won’t It Cost Too Much to Improve Quality?

Internal Appraisal
and and
External Prevention
Failure
Old Belief

4s
Quality
• Common Concerns:
>How can you reduce internal and external failure costs
without increasing prevention and appraisal costs?
>At a certain point , would it become uneconomical to
improve quality? 1-27
 COPQ ECONOMICS (New Belief)
The Enlightened Perspective

Internal Appraisal
and and
External Prevention
Failure
New Belief
4s
5s
6s

Quality

• Many feel that beyond 3 or 4 sigma, the cost of reducing defects

exceeds benefits of reducing COPQ.
• Moving to 5 and 6 sigma quality allows you to dramatically reduce
prevention and appraisal.
• We cannot inspect our way to Six Sigma; we must eliminate defects at
the root source.
• We must abandon the “minor adjustment” philosophy and consider 1-28
new/aggressive ways of running our business.
 COPQ ECONOMICS (Loss - No Loss)

Impact of Variation on Cost

The Traditional View
Loss
No Loss
COST

Lower Upper
Specification Target Specification
Limit
Limit

The Enlightened View

Loss
COST Loss

Upper
Lower
Specification Target Specification
Limit
Limit

• Traditional View - any results within specifications is acceptable

and lessens the need to improve quality.
• Enlightened View - anything that deviates from the “desired
target” has a cost and represents a loss. 1-29
 SYNERGY OF LEAN
THINKING & SIX SIGMA

• Expand Six Sigma definition to include reduction of

variation in the “time it takes to complete a process”
(SPAN).
• Integrate concepts of Six Sigma with Lean Thinking
to achieve improvements across the organization.
• Accomplished by reducing the number of non-value
added steps in a process, reducing wait time
between value added steps, reducing complexity of
value added steps and eliminating all forms of waste
(Muda).

1-30
“Time is nearly as important an improvement metric as
is quality and reducing process lead times and variation
in the time it takes to complete a process has just as
much potential for improving a company’s performance
as reducing variation in quality”

Jack Welch
-former CEO of GE

1-31
 SERVICE APPLICATIONS

• Cost related to work that adds no value (non-value

added) is higher than in manufacturing in both
percentage and dollars.
• Studies indicate work that adds no value typically
accounts for at least 50% of the total service costs.

1-32
 WHAT IS LEAN?

• Referred to as Lean Manufacturing or Lean Production

• Originally developed by Toyota Motor Company
• Objective is to eliminate all forms of production process
Muda, such as:
• Overproduction
• Waiting time for machines or operators
• Transportation waste
• Excess inventory
• Wasted motion
• Waste of rework

1-33
 LEAN THINKING

• When we eliminate waste, the production cycle is

compressed resulting in shortened cycle times,
improved quality and reduced costs.
• Toyota realized that product quality is the results of
process quality.

1-34
 LEAN CONCEPTS

• Most processes are “non-lean” – less than 10% of

process time consists of value added steps (90% is
Muda).
• Reduce work-in-process (WIP) – speed up any
process by reducing the amount of WIP.
• Create a pull system – every process should operate
by “pull”, not “push”……the only trigger for releasing
work into the process is an item exiting the process.
• 80-20 rule – 20% of the activates cause 80% of the
delays. We have to eliminate those “time traps”.

1-35
 LEAN MEANS SPEED

• As velocity increases, cost & capital expenditures are

reduced.
• Lean is focused on creating “flow” through the entire
“value stream”.
• Six Sigma is focused on identifying and reducing
variation.
• The focus of lean is reducing non-value added steps
while Six Sigma improves the quality of the value
added steps.

1-36
 PROCESS YIELD vs SIGMA
# of Steps 3s 4s 5s 6s
Lean reduces non-value added steps

1 93.32% 99.379% 99.9767% 99.99966%

7 61.63% 95.733% 99.839% 99.9976%

10 50.08% 93.96% 99.768% 99.9966%

20 25.08% 88.29% 99.536% 99.9932%

40 6.29% 77.94% 99.074% 99.9864%

Six Sigma Improves quality of value added steps

• It is much harder to achieve high levels of quality with

processes that have a lot of steps and low quality has a
much greater cumulative impact on complex processes.
1-37
 RESULTS OF APPLYING SIX SIGMA &
LEAN THINKING SIMULTANEOUSLY

• Getting faster will improve quality.

• Improving quality will make you faster.
• Reducing complexity improves speed and
quality.

1-38
 BASIC SIX SIGMA CONCEPTS
AND TOOLS
Histogram and the Normal Distribution
The Histogram

25

20

Frequency
m 15
Units of Measure

10
The Normal Curve
5
Performance
Limit
Probability 0
Area of Yield of a Defect 1.238 1.240 1.242 1.244
Raw Data
Units of Measure

• Histogram - good way to represent any situation is to transform

the data into a picture.
• Histogram represents the distribution of the data.
• Most cases, distribution is similar to the normal distribution (bell
1-39
shaped curve).
 BASIC SIX SIGMA TOOLS AND
CONCEPTS
Shape, Location and Spread
Variable X Measurements

75 80 75 65 70
14 85 70 70 85 70 Number of Cases = 50
60 80 80 80 65 Mean = 75
12
80 75 75 70 85 Median = 75
70 75 75 75 85 Standard Deviation = 8.3299
10 80 55 70 70 85 Range = 40
Frequency

65 70 80 75 65 Variance = 69.388
8
75 85 90 80 65 Minimum = 55
70 75 75 80 80 Maximum = 95
6
75 95 90 60 65
4

2
S ( Xi - X )2
n

0 s=
s =^ i=1

50 60 70 80 90 100 110 n-1

Values of X n

^ S Xi
X = m = i=1 n

• “Measure of location” refers to the way in which the central tendency of the
data can be calculated/displayed.
• Mean is the best way to estimate the central tendency.
• Median is the middle point of the data. It divides the distribution into
halves.
• Spread (variation) can be estimated by calculating range or standard 1-40
deviation.
 BASIC SIX SIGMA TOOLS AND
CONCEPTS
Specification Limits

m
Relatively little data is outside the Spec
Limits so the defect rate is LSL
comparatively low USL

m
T

LSL USL

T
Much of the data is beyond the Spec
Limit so the Defect Rate is very high

• Specifications = expression of customer needs and is

“goalpost” by which defects are determined.
• If process output is not within specifications, a defect has
been produced.
1-41
 SPECIFICATION LIMITS
Mean
Upper
Limit
Frequency

0 24h 48h Time to

deliver
information
Much of the data is beyond the package
Limit so the defect rate is very high

• Manufacturing Environment - specifications usually

established by Engineering.
• Transactional Environment - specifications are rarely
established.
> Major change in mindset is required.
> Requires development of process specifications where
1-42
none existed before.
 SIX SIGMA TOOLS AND CONCEPTS
Probability and Defects
300

250

Number of Parts
200
LSL USL
150

100

50

0
1.233 1.235 1.237 1.239 1.241 1.243 1.245 1.247

• Probability of defects and yield have an important relationship.

• Consider the following production results:
 No. of units > upper specification = 22
 No. of units < lower specification = 31
 Total units produced = 1000
1-43
 22 + 31 = 53 defective units
 PROBABILITY AND DEFECTS

• Opportunities for a defect = 1000 = no. of times we “rolled

the dice”.
• Roll of dice = 53 defects.
• Results:
* Probability of a defect = 53/1000 = .053 (5.3%).
* Process yield = 1 - .053 = .947 (94.7%).
• Must also consider units reworked, opportunities missed,
units recycled. These losses are our “Hidden Factory”.

1-44
 SIX SIGMA TOOLS AND CONCEPTS

s
A Tale of Two Sigmas
µ
S (Xi - m)
N
2
s= i=1

Z = SL - m
s -

T
+

USL x
6s

• Process Standard Deviation ( s ) determines the spread around the mean;

larger then s, the worse the process is performing.
• Standard deviation is NOT the process sigma value.
• Process Sigma Value (Z) relates the process variation to the output’s
specification limits, relative to the process mean. It is the number of standard
deviations that can fit between the mean and specification limits.
1-45
 SIX SIGMA TOOLS AND CONCEPTS
Shifts and Drifts
Problem with Spread

Desired Short-Term
Performance
Current (st)
Situation
Accurate
(but not precise) Dynamic Mean
LSL T USL

Long-Term
Performance
(lt)
Problem with Centering
Current LSL Nominal USL
Desired Situation
Precise
(but not
accurate) Short-Term

LSL T USL
Long-Term

d LSL USL

• Variation is inherent in every process and is independent of specifications.

• Process center is independent of design target.
• Sigma level includes a / 1.5 s value to account for “typical” shifts and drifts
of the mean.
• Process spread and the shift and drift results in Process Long Term Variation.
• Variation is the effect of trivial many (white noise) and vital few (black noise).1-46
 THE GOAL OF SIX SIGMA
(Distribution Shifted ± 1.5s )

s PPM

2 308,537
3 66,807
4 6,210
5 233
6 3.4
Process Defects per Million
Capability Opportunities

• With a Six Sigma short term process, the probability to

produce out of specification results, even with a 1.5
sigma shift = 3.4 parts per million.
• Process is ROBUST to variation.
1-47
 SIX SIGMA TOOLS AND CONCEPTS
• Normal table - can be used
The Standard Normal Deviate to determine probability of
(Z value - short- and long-term) defects.
Z Area Z Area Z Area Z Area • Table represents how many
0.00 .500000000 1.51 .065521615 3.02 .001263795 4.53 .000002999
0.05 .480061306 1.56 .059379869 3.07 .001070234 4.58 .000002369 sigmas (standard
0.10 .460172290 1.61 .053698886 3.12 .000904215 4.63 .000001867
0.15
0.20
.440382395
.420740315
1.66
1.71
.048457216
.043632958
3.17
3.22
.000762175
.000640954
4.68
4.73
.000001469
.000001153
deviations) the specification
0.25
0.30
.401293634
.382088486
1.76
1.81
.039203955
.035147973
3.27
3.32
.000537758
.000450127
4.78
4.83
T
.000000903
.000000705 limit is away from the
0.35 .363169226 1.86 .031442864 3.37 .000375899 4.88 .000000550
average.
ZLT = Z  Z
0.40
0.45
ST
0.50
.344578129
.326355105
Shift
.308537454
1.91
1.96
2.01
.028066724
.024998022
.022215724
3.42
3.47
3.52
.000313179
.000260317
.000215873
4.93
4.98
5.03
.000000428
.000000332
.000000258
0.55
0.60
.291159644
.274253121
2.06
2.11
.019699396
.017429293
3.57
3.62
.000178601
.000147419
5.08
5.13
.000000199
.000000154
• Once the Z value has been
0.65 .257846158 2.16 .015386434 3.67 .000121399 5.18 .000000118
0.70 .241963737 2.21 .013552660 3.72 .000099739 5.23 .000000091 computed, the probability of
0.75 .226627465 2.26 .011910681 3.77 .000081753 5.28 .000000070
0.80 .211855526
m
2.31 .010444106 3.82 .000066855 5.33 .000000053 defects can be determined.
Z = SL
0.85 .197662672 2.36 .009137469 3.87 .000054545 5.38 .000000041
0.90 .184060243 2.41 .007976235 3.92 .000044399 5.43 .000000031
0.95 .171056222 s
2.46 .006946800 3.97 .000036057 5.48 .000000024
• Z of 3.01 = .001306 (.13%
1.00
1.05
.158655319
.146859086
2.51
2.56
.006036485
.005233515
4.02
4.07
.000029215
.000029215
5.53
5.58 m
.000000018
.000000018 SL
1.10
1.15
.135666053
.125071891
2.61
2.66
.004527002
.003906912
4.12
4.17
.000019047
.000015327
5.63
5.68
Z
.000000010
.000000008
probability of defects (short
1.20
1.25
.115069593
.105649671
2.71
2.76
.003364033
.002889938
4.22
4.27
.000012305
.000009857
5.73
5.78
.000000006
.000000004
term).
1.30 .096800364 2.81 .002476947 4.32 .000007878 5.83 .000000003
1.35
1.40
.088507862
.080756531
2.86
2.91
.002118083
.001807032
4.37
4.42
.000006282
.000004998
5.88
5.93
.000000003
.000000002 • Z of 1.51 = .065521 (6.5%)
1.45 .073529141 2.96 .001538097 4.47 .000003968 5.98 .000000001
1.50 .066807100 3.01 .001306156 4.52 .000003143 6.03 .000000001 with 1.5 sigma process drift
(long term) 1-48
 SIX SIGMA TOOLS AND CONCEPTS

• Defects per Unit (DPU)

DPU = D/U
where; DPU = average no. of defects observed
per unit of output
D (Defect) = no. of times output
does not meet specification
U (Unit) = no. of units of output

• Defect per Million Opportunities (DPMO)

DPMO = DPU x 106 (1,000,000)
where; DPMO = defects per million
opportunities
DPU = average no. of defects observed per unit of output.
1-49
 SIX SIGMA TOOLS AND CONCEPTS
Process Capability

1 2 3 4 5

Precise but not

Accurate

Accurate but not

Precise

• If the process has a small standard deviation (less variation), but the process
output is far from the target value, the process is “Precise but not accurate”.
• If the process output is centered around a target value, but has a wide spread of
values (large standard deviation), the process is “Accurate but not precise”.
1-50
 SIX SIGMA TOOLS AND CONCEPTS
Process Capability Ratios Cp & Cpk

Lower Upper
Specification Specification

Continuous Improvement
Lower Upper
Cp < 1
Specification Specification Potential Real
Capability Capability

Cp = 2.0 Cpk = 2.0

Increase in the number of rejects

Cp = 2.0 Cpk = 1

Cp = 2.0 Cpk < 1

Cp = 2.0 Cpk = 0

Cp = 2.0
Cp = 2.0 Cpk < 0

Cp = 2.0 Cpk < -1

• Process capability ratios provide an indicator to assess a process relative to

the specification criteria.
> CP is a measure of the potential of a process to produce product within a
specified tolerance. In effect, the CP helps us to answer the question,
“Are we able to produce good products”?
> CPK addresses the concept of precision and answers the question, “Is
your process centered on target’? In effect, the process may have little
variation (precise), but be far from the target (not accurate). CPK also
answers the question, “Are we making good products”? 1-51
 PROCESS CAPABILITY RATIOS

6 s process = Z ST = 6 CP = 2
ZLT = 4.5 CPK = 1.5

1-52
 SIX SIGMA TOOLS AND CONCEPTS
Defect Number
Type Observed
A 3
DPU = 1.0
B 1
C 0
D 2
E 4
Total 10 37 Units
D=0
Y.TP
S 90 = Throughput Yield
YFT = = .90,or 90% (Units With Zero Defects)
U 100
  100
YTP = e DPU = e 1.0 = .3679 or 37%
90 Units
Units Operation Verify Passed
Submitted

Not 53 Units
OK D=1

Rework
10 Units Repaired

37% ° 90% Scrap

... why not? 0 Units Scrapped

• Classical Yield (YFT - First time yield) - divide units passed by units
submitted.
• Rolled throughput Yield (YTP) - gives visibility to process steps with
high defect rates or other hidden losses (Hidden factory).
1-53
 SIX SIGMA TOOLS AND CONCEPTS

Pareto & The Leverage Principle

100
90 84 Pareto
Analysis of Process Inputs
80

Percentage

DPU/DPMO
70
60
50
40
30
20 10
10 3 2 1
0
A B C D E

• Vital few inputs (X’s) are responsible for majority of problems with the
outputs (Y’s).
• Pareto chart prioritizes which variables need to be studied to improve
the process.
1-54
 ISO 9000 - SIX SIGMA SYNERGY

• The ISO 9000 standards establish the baseline measurements

for a quality management system and emphasize that the only
way to maintain quality is by continuous improvement of the
quality system.
• As a result, the standards are recognized as a good foundation
upon which a more sophisticated quality improvement process,
such as Six Sigma, can be built.
• Also, the standards and consistency fundamental to ISO 9000
are the main building blocks for Six Sigma implementation.
• Six Sigma has a great potential to build on the success of ISO
9000.
• In addition, like ISO 9000, Six Sigma is a management process.
In effect, Six Sigma is a new way to manage the business.
• Although Six Sigma has a strong technical component, it is not
primarily a technical program. 1-55
 ISO 9000 - SIX SIGMA SYNERGY
CONT.
• Six Sigma has been the first initiative which has “pulled”
together employees as a result of a common goal; not only
within disciplines, but across disciplines.
• Effective implementation of ISO 9000 has set the stage for Six
Sigma.
• This has been evidenced by some of the following changes.
– Teamwork and participation of all employees.
– Discipline and structure as a result of following established
systems and procedures.
– Focus on continual improvement by development of a
corrective action, internal audit and management review
process.
– Cultural change as a result of the entire registration process.
– Pride among employees as a result of participation in this
major accomplishment. 1-56